Ask Dale Gillham Trading Tips 16-07-13 Qantas Airways Limited (QAN)

‘Ask Dale’ is a segment where each fortnight I review one listed company from the Australian share market, suggested by our Facebook subscribers. If you would like me to review a stock that you either currently hold or are looking to trade then please post your suggestion in the comments section of the ‘Ask Dale’ post on our Facebook page (the ‘Ask Dale’ post will appear on Facebook every second Thursday). On the following Tuesday i will record and post my analysis on both our Facebook page and blog.

In this week’s edition I provide my thoughts on the Australian stock Qantas Airways Limited (QAN). QAN provides passenger and air freight transportation services in Australia and internationally. The company also offers catering, ground handling, and defense services; and logistics services, including truck road feeder services to the air freight industry, courier services to small and medium size enterprises and individuals, and baggage services. In addition, it operates a Frequent Flyer loyalty program. The company operates its aircrafts under the Qantas and Jetstar brands. The company was founded in 1920 and is based in Mascot, Australia.

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to learn to trade shares and become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment. For more information please visit www.wealthwithin.com.au

I have been enjoying the “ask Dale” segments; particularly the analysis of different support and resistance levels. One question it has raised for me is how to handle shares that are in “blue sky” territory. What strategy should be employed when you own a stock that is moving to all-time highs? Should you consider buying a stock that is in a clear uptrend when you do not know where the next resistance level is? CBA is probably an example which may shortly surpass it’s all time high. To buy in or not?

Thanks for the tips,
Kristy

http://wealthwithin.com.au Blake

Hi Kristy,

Blake here. I’m part of the analyst team here at Wealth Within. Glad to hear your enjoying the Ask Dale segment so much.

You’ve posed a great question here and it’s one i have a lot of traders and investors ask me. If you hold a stock that is headed into ‘blue sky’ the answer is simple as you should should continue to hold until a sell signal appears.

When it comes to making a buying decision for a stock in a similar position, if a strong uptrend is in place you need to assume this is likely to continue until the chart tells you otherwise. This is where you must have a solid understanding of technical analysis (take a look at our Diploma course for example) so that you can recognise whether based on current price action the stock looks like it will continue or is perhaps finding resistance and may start to fall. Case in point, CBA. The stock is continuing higher after pulling back to a low in mid-June. By all accounts the uptrend looks set to continue and i don’t see any reason (at this stage) why CBA won’t make a new all time high.

Being a technical analyst i firmly believe that what has happened in the past is likely to repeat in the future. In other words stocks unfold in cycles and cycles tend to repeat. IN saying this you might like to conduct further research on CBA from a technical perspective. How does the stock normally react when it is close to making new all-time highs? Is there generally resistance prior to breaking through or does it shoot straight through. The answers will give you confidence in making a decision.